Wärtsilä to ax 1,000 jobs

JANUARY 29, 2014 — Björn Rosengren, President & CEO of Wärtsilä, had a "first the good news, then the bad" message today.

The bad news first: Wärtsilä will shed 1,000 jobs — 200 of them in Finland.

And the good? In 2013, reported Rosengren, "profitability remained resilient" despite a lower level of sales. Full year operational profitability reached 11.2% and cash flow from operating activities increased to EUR 578 million during the year. There was significant improvement in the marine markets during 2013, and ordering was active in all major vessel segments.

"There was significant improvement in the marine markets during 2013, and ordering was active in all major vessel segments," said Rosengren. "In the power plant markets delays in customer decision-making continued. This impacted our Group order intake levels, which decreased by 1% compared to the previous year. The service markets remained stable. Long-term agreements continue to be a strategic focus area for the Services business, and I am pleased that several such contracts were signed during the year."

Market outlook for 2014 "remains cautious, although a slight improvement may be seen in certain areas" and Rosengren expects profitability to remain at a similar level to that of 2013."

JOB CUTS

Now for what Wärtsilä announced as "a process to realign its organization to secure future profitability and competitiveness."

The job reductions will "impact all businesses and support functions" and Wärtsilä is looking for them to produce annual savings of EUR 60 million.

"The effect of these savings is expected to materialize fully by the end of 2014," says the company. "The non-recurring costs related to the restructuring measures will be EUR 50 million. Of these costs EUR 11 million was recognized in 2013, as certain measures were initiated at the end of the year."

"In an environment of slow growth and intense competition, we must take steps to adjust our cost structure accordingly. Only by increasing the efficiency and flexibility of our organisation globally can we secure profitability and maintain competitiveness going forward. Unfortunately redundancies cannot be avoided," says Mr. Rosengren.

The planned reductions are subject to consultation processes, which will be initiated in the affected countries according to local practices and legislation. The company will provide support and consultation as well as assistance in re-employment in the impacted countries.

At the end of 2013, Wärtsilä had 18,663 employees in nearly 70 countries globally.